Correlation Between Premier Marketing and Thai Coating

Can any of the company-specific risk be diversified away by investing in both Premier Marketing and Thai Coating at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Premier Marketing and Thai Coating into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Premier Marketing Public and Thai Coating Industrial, you can compare the effects of market volatilities on Premier Marketing and Thai Coating and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Premier Marketing with a short position of Thai Coating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Marketing and Thai Coating.

Diversification Opportunities for Premier Marketing and Thai Coating

-0.19

Correlation Coefficient

Premier Marketing  Thai Coating

Good diversification

The 3 months correlation between Premier and Thai is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Premier Marketing Public and Thai Coating Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Coating Industrial and Premier Marketing is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Premier Marketing Public are associated (or correlated) with Thai Coating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Coating Industrial has no effect on the direction of Premier Marketing i.e., Premier Marketing and Thai Coating go up and down completely randomly.

Pair Corralation between Premier Marketing and Thai Coating

Assuming the 90 days horizon Premier Marketing Public is expected to generate 0.4 times more return on investment than Thai Coating. However, Premier Marketing Public is 2.48 times less risky than Thai Coating. It trades about 0.17 of its potential returns per unit of risk. Thai Coating Industrial is currently generating about -0.02 per unit of risk. If you would invest  846.00  in Premier Marketing Public on December 30, 2024 and sell it today you would earn a total of  174.00  from holding Premier Marketing Public or generate 20.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Premier Marketing Public  vs.  Thai Coating Industrial

Premier Marketing Public

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Premier Marketing Public are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Premier Marketing disclosed solid returns over the last few months and may actually be approaching a breakup point.

Thai Coating Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thai Coating Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Thai Coating is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Premier Marketing and Thai Coating

The main advantage of trading using opposite Premier Marketing and Thai Coating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Marketing position performs unexpectedly, Thai Coating can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Thai Coating will offset losses from the drop in Thai Coating's long position.

The idea behind Premier Marketing Public and Thai Coating Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.